Guatemala’s Tobacco Suit Dismissed

A federal judge Thursday dismissed a lawsuit brought by the government of Guatemala against the tobacco industry, saying that officials could not show the government suffered a “direct injury” from the actions of various cigarette makers.

The ruling, issued by U.S. District Judge Paul L. Friedman, could signal the fate of numerous other lawsuits filed by foreign governments against major tobacco companies. Friedman has been assigned to handle all tobacco litigation filed by foreign governments and now has jurisdiction over five other cases brought by the governments of Bolivia, Nicaragua, Ukraine and Venezuela, as well as the Brazilian state of Goias. Attorneys for the tobacco firms intend to attack those suits on similar legal grounds.

Guatemala had named 11 defendants, including Philip Morris Cos. and Brown & Williamson Tobacco Corp. The suit alleged that Guatemala has been forced to pay more than $300 million since 1973 to treat smoking-related illnesses and would have curtailed smoking in the country long ago if it had been aware of the dangers. The suit accused the tobacco companies of conspiring to conceal and misrepresent the health risks associated with their product.

From the start, attorneys for the tobacco firms accused the foreign governments of trying to cash in by joining a wave of litigation making its way through U.S. courts.

Steven B. Rissman, assistant general counsel for Philip Morris, said Thursday that Friedman’s decision “should send a strong message to foreign governments looking to use the U.S. court system to generate cash windfalls for their government’s treasuries.”

Nicholas Gilman, a Washington attorney representing Guatemala, said he and others were reviewing the decision and that “the chances of an appeal are very good.”

In his 19-page ruling, Friedman said the suit required the court to speculate about what actions the Guatemalan government would have taken to discourage smoking had it known the risks, to assess what impact those actions would have had, and to determine how much of the country’s medical expenses were attributable to smoking. He said this required too many “layers of conjecture” and that the law called for Guatemala to show it was directly harmed.

“Guatemala or its citizens may well have been victims of the tobacco industry, but Guatemala has alleged no injury resulting from defendants’ alleged misconduct that is sufficiently direct to allow Guatemala to assert its claims,” Friedman declared.

The judge said he was not ruling out other potential legal action.

Philip Morris shares rose 38 cents to close at $23.69 on the New York Stock Exchange. American depositary receipts of British American Tobacco, parent of Brown & Williamson Tobacco Corp., rose 63 cents to close at $11.13 on the American Stock Exchange.